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Stimulus Failings May Bode Well for AOL's Dial-up Business

A statement from AOL CEO Tim Armstrong about the slowing decline of the dial-up market gained credence from a third-party report that surfaced one day after his appearance at the UBS investor conference last week

A statement from AOL CEO Tim Armstrong about the slowing decline of the dial-up market gained credence from a third-party report that surfaced one day after his appearance at the UBS investor conference last week.

Most observers would expect — to AOL’s chagrin — that the number of people without broadband Internet will almost disappear over the next five years. But Insight Research Corp. has concluded that the number of households without broadband Internet will drop by around only 31 percent between now and 2014. The Boonton, NJ-based company projects that 40 million households — taking into consideration further penetration by broadband marketers — will still have either dial-up access or no Internet at all. That figure would be down from the current 58 million without high-speed, the telecom research firm said.

The report also characterized the part of the federal stimulus package designed to help financially challenged households get broadband as insufficient. According to Insight, the currently planned stimulus spending of $6.4 billion allows for an annual investment of $164 per household for broadband access — which accounts for approximately four months of a normal cable high-speed subscription.

(It’s worth noting that the company’s math appears to be fairly calculated, removing from the equation rural households that cannot get a cable connection at all and forcing them, if they choose, to go the less-popular satellite route for high-speed. Factoring them into the math as equally relevant stimulus targets compared to financially-challenged urbanites would have been problematic.)

At any rate, the conclusion is potentially good news for AOL. It still has around five million paid subscribers for its $9.95 per month dial-up access. With such a considerable chunk of the populace unable to either afford or logistically get a cable connection — perhaps well into the next decade — the Internet pioneer’s cash cow appears to be safe from slaughter.